The first type of health insurance became available during the 1930s when the Blue Cross offered a prepaid hospitalization service. Following on from its success, a number of physicians formed Blue Shield. Prior to this time, there was no real demand for health insurance in the US market, although numerous advances in health care, in addition to the higher costs, eventually meant that there was a need for health insurance. The success of Blue Cross and Blue Shield lead to various commercial insurance companies offering group insurance. However, in the modern age health insurance plans have matured and developed, and there is now a wide range of policies and plans available to consumers.
Major Medical Insurance requires an insured person to pay a deductible prior to any benefits being received. An insurance company will typically pay 80% of any medical bills, whereas the insured person will be responsible for the remaining 20%. This will allow the beneficiary of the policy to go to any doctor or hospital to receive medical services. You will be required to pay the health care provider directly, and then your insurance company would reimburse 80% of the bill.
You also have the option of signing a release that requests your insurance company to pay the healthcare provider directly, and you would therefore be responsible for paying the remaining 20% directly to either your doctor or the hospital. You will generally find that when someone speaks about traditional health insurance, they are typically referring to Major Medical Health Insurance.
Health Maintenance Organization (HMO)
An HMO is an insurance plan which primarily focuses on long-term care, and you will typically find that it is less expensive than a Major Medical Plan. You will be required to choose a primary care physician, who will then be responsible for providing preventative care. Your physician is also responsible for coordinating health care should you require hospitalization, or to visit any additional specialists.
Due to the fact that you're limited in your choice, this will generally keep the costs pretty low. You will usually need to choose a physician from a specified network, and often they will not cover services that are deemed unnecessary. HMOs are often referred to as managed health care, and are known for being able to control the overall costs associated with health insurance.
Preferred Provider Organization (PPO)
A PPO is fairly similar to an HMO in that there is a network of physicians to choose from. However, you are not merely limited to the physicians within a network, and can actually see any doctor you wish. This is how a PPO differs from an HMO. However, you will typically find that any deductibles and co-payments will be far less should you use the in network services.
You will actually find that if you use a network physician the charges are likely to be far more reasonable than an out of network physician. However, your insurance company will still only pay 80% of the in-network charges. The choice is very much down to you, although should you choose to use out of network services you can expect to pay a higher fee. With that said, many people actually prefer to not be limited and to be able to choose their own doctors for treatment.
Point Of Service (POS)
A Point Of Service is regarded as a combination of a PPO and an HMO. You will initially choose a primary care provider, and all your healthcare needs will start by consulting a specific physician. Your chosen doctor will authorize a referral to a specialist if this is required, and they may choose an in or out of network healthcare provider. However, you should be aware that should you choose to see a specialist without a referral, your insurance company may decline to pay for the services. A POS plan is still regarded as a managed health care plan, although you have far more oaptions than in an HMO.
If you are offered health insurance through your company, as an employee, you will typically find that you do not have a choice in the type of health care plan that they offer. However, it is vitally important that you understand the differences between these plans. With that said, there are various companies who are able to offer several different types of health insurance plan, and will typically leave the choice up to you. If you are self-employed you will then, obviously, have the opportunity to choose whichever plan best suit your individual circumstances, and of course your budget.
A good health insurance plan will provide you with both peace of mind and the freedom to not worry about any health-related costs. Your plan will pay for bills such as hospital fees, medical checkups, and even the cost of drugs, although this will obviously depend on the type of plan you have opted for. Prior to choosing a health insurance plan it is important that you consider your lifestyle, your family background, the nature of your work and work conditions, and indeed your previous medical history.